via Trade Finance Global by Deepa Sinha
- Instant payments are transforming transaction banking by compressing settlement cycles.
- Banks face mounting pressures to overhaul liquidity management, shift to 24/7 continuous settlement, and balance seamless payments with safeguards against fraud and bank runs.
- Stricter regulation, real-time FX risk and rising fraud threats mean more is demanded within instant payments demand advanced technology.
Instant payments are being hailed far and wide as the new frontier in transaction banking, making transaction fees and processing times as much a relic of the past as travellers’ cheques and bank tellers.
However, things are not quite so frictionless as they seem behind the scenes, with banks having to grapple with the risks associated with instant payments – from fraud to bank runs – while adapting to a brand new settlement regime and evolving regulatory standards.
A new whitepaper by BAFT (Bankers Association for Finance and Trade) explores the key issues faced by banks in the era of instant payments and what they can do to adapt while still keeping up with the markets.